- Liquidity of $202.1 million as of
December 31, 2018 -
- Eight disposed properties with gross proceeds
of $15.2 million -
Spirit MTA REIT (NYSE: SMTA) ("SMTA" or the "Company"), a
net-lease real estate investment trust ("REIT") headquartered in
Dallas, Texas, today reported its financial and operating results
for the fourth quarter ended December 31, 2018.
Unless otherwise specified, financial and operating information
prior to May 31, 2018 reflects the financial and operating
information of SMTA's legal predecessor entities.
FOURTH QUARTER HIGHLIGHTS
- Liquidity of $202.1 million as of
December 31, 2018, is comprised of cash, cash equivalents and
available borrowing capacity under our variable funding notes.
- Closed on $165.0 million in
non-recourse financing loans on November 1, 2018 with net proceeds
of $141.9 million, secured by 87 Shopko assets (85 owned properties
and two seller-financed notes on properties) in our Other
Properties portfolio.
- Closed on $50.0 million of variable
funding notes within Master Trust 2014 on November 1, 2018. No
funds were drawn on the variable funding notes as of
December 31, 2018.
- Disposed of eight properties for $15.2
million in gross proceeds. Included in these sales were two
properties leased to Shopko sold for gross proceeds of $8.1
million.
CEO COMMENTS
"As a result of its bankruptcy filing, Shopko stopped making
rental payments to us and therefore we defaulted on the $165
million CMBS financing related to those properties. Shortly
thereafter, our lender foreclosed on the Shopko properties and has
taken ownership of them. Given the impact on our ongoing cash
available for distribution, we have accelerated efforts in
exploring strategic alternatives for the
Company. Nevertheless, we declared a first quarter 2019
special dividend of $0.33 per share and now have returned a total
of $1.99 of cash per share to our shareholders since our
inception. We will continue to keep shareholders updated on
further developments related to our ongoing assessment of strategic
alternatives,” stated SMTA Chief Executive Officer, President,
Chief Financial Officer and Treasurer Ricardo Rodriguez.
FULL YEAR 2018 HIGHLIGHTS
- On May 31, 2018, the Spin-Off from
Spirit Realty Capital, Inc. ("Spirit") was completed with the
distribution of one share of SMTA common stock for every ten shares
of Spirit common stock held by each of Spirit's shareholders as of
May 18, 2018, with 42,851,010 total shares of SMTA common stock
issued in conjunction with the Spin-Off.
- Invested $112.6 million in the
acquisition of nine properties, with a weighted average lease term
of 15.5 years, a weighted-average initial cash yield of 6.52% and
an economic yield of 7.44%.
- Disposed of 47 properties for $91.0
million in gross proceeds. Included in these sales were ten
properties leased to Shopko sold for gross proceeds of $46.7
million.
FINANCIAL RESULTS
Total revenues for the Master Trust 2014 and Other Properties
segments were $46.4 million and $16.5 million, respectively, for
the three months ended December 31, 2018, compared to $43.4 million
and $14.2 million for the same period last year. Total revenues for
the Master Trust 2014 and Other Properties segments were $182.5
million and $63.8 million, respectively, for the year ended
December 31, 2018, compared to $169.6 million and $62.2 million,
respectively, for the same period last year.
Net loss attributable to common shareholders was $214.0 million,
or $5.00 per share, for the three months ended December 31, 2018,
compared to net income of $1.5 million, or $0.03 per share, for the
same period last year. Net loss attributable to common shareholders
was $229.5 million, or $5.36 per share, for the year ended December
31, 2018, compared to net income of $18.3 million, or $0.43 per
share, for the same period last year. The impact of the Shopko
bankruptcy filing resulted in our recording of impairment charges
related to tangible and intangible assets of $168.5 million and an
allowance for loan loss of $33.8 million relating to our Shopko B-1
Term Loan for the quarter and year ended December 31, 2018. The
impact of these items is included in net loss attributable to
common shareholders.
FFO per diluted share was $(0.72) and $0.54 for the three months
ended December 31, 2018 and 2017, respectively. FFO per diluted
share was $0.58 and $2.56 for the years ended December 31,
2018 and 2017, respectively.
AFFO for the three months ended December 31, 2018 was $14.5
million, compared to $29.0 million for the same period last year.
AFFO per diluted share was $0.33 and $0.68 for the three months
ended December 31, 2018 and 2017, respectively. AFFO for the year
ended December 31, 2018 was $89.8 million, compared to $126.8
million for the same period last year. AFFO per diluted share was
$2.09 and $2.96 for the years ended December 31, 2018 and
2017, respectively.
On December 5, 2018, the Board of Trustees declared a total
cash dividend of $1.33 per common share, comprised of $0.33 for the
quarter ended December 31, 2018 and a special cash dividend of
$1.00, that was paid on January 15, 2019 to holders of record
as of December 31, 2018. The Board of Trustees also declared a
cash dividend of $0.625 per share of SMTA Preferred Stock that was
paid on December 31, 2018 to holders of record as of
December 17, 2018.
The amount and timing of dividends for 2019 and beyond will be
at the discretion of the Board of Trustees. The Board of Trustees'
decisions regarding the payment of dividends will depend on many
factors, including, but not limited to, maintaining the Company's
REIT tax status, timing and magnitude of disposition activities,
execution of strategic alternatives and working capital needs.
PORTFOLIO HIGHLIGHTS
As of December 31, 2018, SMTA's diversified real estate
portfolio, comprised of 876 owned properties, with 778 and 98 in
the Master Trust 2014 and Other Properties segments, respectively,
was 97.1% occupied with a weighted average remaining lease term of
9.7 years.
During the year ended December 31, 2018, SMTA invested $115.2
million for the acquisition of nine properties and revenue
producing capital expenditures on 18 properties, all related to the
Master Trust 2014 portfolio. The newly acquired properties have a
weighted average lease term of 15.5 years, a weighted-average
initial cash yield of approximately 6.52% and an economic yield of
7.44%.
During the year ended December 31, 2018, SMTA disposed of 47
properties for $91.0 million in gross proceeds, including the sale
of 35 income producing properties for $74.8 million. These
disposals comprised:
- 35 properties within Master Trust 2014
for gross proceeds of $38.9 million,
- ten properties leased to Shopko for
gross proceeds of $46.7 million, and
- two other properties for gross proceeds
of $5.4 million.
BALANCE SHEET, LIQUIDITY & CAPITAL MARKETS
- As of December 31, 2018, net
investments for the Master Trust 2014 and Other Properties segments
were $1.7 billion and $0.34 billion, respectively.
- As of December 31, 2018, total
cash was $161.0 million and restricted cash for the Master Trust
2014 and Other Properties segments was $25.7 million and $18.4
million, respectively.
- As of December 31, 2018, debt for
the Master Trust 2014 and Other Properties segments was $1.91
billion and $0.23 billion, respectively.
- Adjusted Debt to Annualized Adjusted
EBITDAre was 12.6x as of December 31, 2018, based on the three
months ended December 31, 2018 (during 2018, the definition of
Adjusted EBITDAre was revised to reflect adjustments made for
income producing acquisitions and dispositions made during the
quarter, and Annualized Adjusted EBITDAre was revised to
reflect adjustments for items where annualization is not
appropriate).
SUBSEQUENT EVENTS
- On January 16, 2019, Shopko, the
Company's largest tenant, filed for relief under Chapter 11 of the
Bankruptcy Code.
- On January 16, 2019, SMTA announced
that its Board of Trustees had elected to accelerate its strategic
plan by initiating a process to explore strategic alternatives
focused on maximizing shareholder value. Strategic alternatives to
be considered may include, but are not limited to, a sale of the
Company or Master Trust 2014, a merger, the sale of other assets,
and the maximizing of recoveries in connection with the Shopko
bankruptcy filing.
- On March 1, 2019, the lender for the
Shopko CMBS financing, with remaining outstanding principal of
$157.4 million, foreclosed on and took ownership of the legal
entities that own the remaining 85 Shopko assets (83 owned
properties and two seller-financed notes on properties)
collateralizing the loan.
- On March 5, 2019, the Board of Trustees
declared a special cash dividend of $0.33 per common share for the
first quarter ended March 31, 2019. The dividend will be paid on
April 15, 2019 to holders of record as of March 29, 2019.
- As of March 19, 2019, SMTA had
approximately $155.8 million in liquidity, comprised of $110.0
million in cash and cash equivalents and $45.8 million in available
borrowing capacity under our variable funding notes.
- As of March 19, 2019, SMTA had
additional liquidity available for acquisitions of approximately
$16.5 million in its Master Trust 2014 Release Account.
- As of March 19, 2019, our
outstanding common share count is 43,085,751.
EARNINGS WEBCAST
The Company has provided pre-recorded comments from management.
Interested parties can listen to the presentation via the
following:
Internet:
The webcast link can be located on the
investor relations page of the Company's website at
www.spiritmastertrust.com
Telephone: (844) 512-2921 (Domestic) / (412) 317-6671
(International) Access code 1133124
ABOUT SPIRIT MTA REIT
Spirit MTA REIT (NYSE: SMTA) is a net-lease REIT headquartered
in Dallas, Texas. SMTA owns one of the largest, most
diversified and seasoned commercial real estate backed master
funding vehicles. SMTA is managed by Spirit Realty, L.P., a
wholly-owned subsidiary of Spirit (NYSE: SRC), one of the largest
publicly traded triple net-lease REITs.
As of December 31, 2018, our diversified portfolio was
comprised of 876 properties, including properties securing mortgage
loans made by the Company. Our properties, with an aggregate gross
leasable area of approximately 19.8 million square feet, are leased
to approximately 203 tenants across 45 states and 23 industries.
More information about Spirit MTA REIT can be found on the investor
relations page of the Company's website at www.spiritmastertrust.com.
FORWARD-LOOKING AND CAUTIONARY STATEMENTS
This press release may contain forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995
and other federal securities laws. These forward-looking statements
can be identified by the use of words such as "expect," "plan,"
"will," "estimate," "project," "intend," "believe," "guidance,"
“approximately,” “anticipate,” “may,” “should,” “seek” or the
negative of these words and phrases or similar words or phrases
that are predictions of or indicate future events or trends and
that do not relate to historical matters. You can also identify
forward-looking statements by discussions of strategy, plans or
intentions of management. These forward-looking statements are
subject to known and unknown risks and uncertainties that you
should not rely on as predictions of future events. Forward-looking
statements depend on assumptions, data and/or methods which may be
incorrect or imprecise and we may not be able to realize them. The
following risks and uncertainties, among others, could cause actual
results to differ materially from those currently anticipated due
to a number of factors, which include, but are not limited to:
industry and economic conditions; SMTA’s ability to succeed in its
strategic plan; SMTA's ability to realize its asset disposition
plan; SMTA’s significant leverage which may expose it to the risk
of default under its debt obligations; risks associated with using
debt to fund SMTA’s business activities (including its ability to
use Master Trust 2014, an asset-backed securitization trust, as its
main financing vehicle, changes in interest rates and conditions of
the debt capital markets, generally); SMTA’s dependence on its
external manager, Spirit Realty, L.P., to conduct its business and
achieve its investment objectives; SMTA’s continued ability to
source new investments; unknown liabilities acquired in connection
with acquired properties or interests in real-estate related
entities; general risks affecting the real estate industry and
local real estate markets (including, without limitation, the
market value of SMTA’s properties, the inability to enter into or
renew leases at favorable rates, portfolio occupancy varying from
SMTA’s expectations, dependence on tenants’ financial condition and
operating performance, competition from other developers, owners
and operators of real estate tenant defaults, potential liability
relating to environmental matters, potential illiquidity of real
estate investments, condemnations, and potential damage from
natural disasters); the financial performance of SMTA’s tenants and
the demand for traditional retail and restaurant space particularly
with respect to challenges being experienced by general merchandise
retailers; SMTA’s ability to pay down, refinance, restructure
and/or extend its indebtedness as it becomes due; SMTA’s or its
manager’s ability to identify, underwrite, finance, consummate,
integrate and manage diversifying acquisitions or investments;
SMTA’s ability to diversify its tenant base; the impact of any
financial, accounting, legal or regulatory issues or litigation
that may affect SMTA or its major tenants; volatility and
uncertainty in the financial markets, including potential
fluctuations in the consumer price index; risks associated with its
failure or unwillingness to maintain SMTA’s status as a REIT under
the Internal Revenue Code of 1986, as amended, and other additional
risks discussed in its most recent filings with the SEC, including
its registration statement on Form 10, as amended and subsequent
Quarterly Reports on Form 10-Q and our annual report on Form 10-K.
SMTA expressly disclaims any responsibility to update or revise
forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by law.
NOTICE REGARDING NON-GAAP FINANCIAL MEASURES
In addition to U.S. GAAP financial measures, this press release
may refer to certain non-GAAP financial measures. These non-GAAP
financial measures are in addition to, not a substitute for or
superior to, measures of financial performance prepared in
accordance with GAAP. These non-GAAP financial measures should not
be considered replacements for, and should be read together with,
the most comparable GAAP financial measures. Definitions of
non-GAAP financial measures, reconciliations to the most directly
comparable GAAP financial measures and statements of why management
believes these measures are useful to investors are included
below.
REPORTING DEFINITIONS AND EXPLANATIONS
Adjusted Funds from Operations (AFFO) AFFO is a non-GAAP
financial measure of operating performance used by many companies
in the REIT industry. We adjust FFO to eliminate the impact of
certain items that we believe are not indicative of our core
operating performance, including restructuring and divestiture
costs, other general and administrative costs associated with
relocation of the Company's headquarters, transactions costs
associated with our Spin-Off, default interest and fees on
non-recourse mortgage indebtedness, debt extinguishment gains
(losses), transaction costs incurred in connection with the
acquisition of real estate investments subject to existing leases,
amortization of the promote fee and certain non-cash items. These
certain non-cash items include non-cash revenues (comprised of
straight-line rents, amortization of above- and below-market rent
on our leases, amortization of lease incentives, amortization of
net premium/discount on loans receivable, bad debt expense and
amortization of capitalized lease transaction costs), non-cash
interest expense (comprised of amortization of deferred financing
costs and amortization of net debt discount/premium) and non-cash
compensation expense (stock-based compensation expense). In
addition, other equity REITs may not calculate AFFO as we do, and,
accordingly, our AFFO may not be comparable to such other equity
REITs’ AFFO. AFFO does not represent cash generated from operating
activities determined in accordance with GAAP, is not necessarily
indicative of cash available to fund cash needs and should only be
considered a supplement, and not an alternative, to net income
(loss) attributable to common shareholders (computed in accordance
with GAAP) as a performance measure.
Adjusted EBITDAre
represents EBITDAre adjusted for transaction costs, real estate
acquisition costs, dispositions for the quarter as if such
acquisitions and dispositions had occurred as of the beginning of
the quarter, revenue producing acquisitions, impairments and loan
losses related to the Shopko loan, debt extinguishment gains
(losses), and amortization (recovery) of the promote fee. We focus
our business plans to enable us to sustain increasing shareholder
value. Accordingly, we believe that excluding these items, which
are not key drivers of our investment decisions and may cause
short-term fluctuations in net income (loss), provides a useful
supplemental measure to investors and analysts in assessing the net
earnings contribution of our real estate portfolio. Because these
measures do not represent net income (loss) that is computed in
accordance with GAAP, they should only be considered a supplement,
and not an alternative, to net income (loss) attributable to common
shareholders (computed in accordance with GAAP) as a performance
measure. A reconciliation of net income (loss) attributable to
common shareholders (computed in accordance with GAAP) to EBITDAre
and Adjusted EBITDAre is included in this release.
Annualized
Adjusted EBITDAre is calculated as Adjusted EBITDAre for the
quarter, adjusted for items where annualization would not be
appropriate, multiplied by four. Our computation of Adjusted
EBITDAre and Annualized Adjusted EBITDAre may differ from the
methodology used by other equity REITs to calculate these measures
and, therefore, may not be comparable to such other REITs. A
reconciliation of Annualized Adjusted EBITDAre is included in this
release.
Adjusted Debt represents interest bearing debt
(reported in accordance with GAAP) adjusted to exclude unamortized
debt discount/premium, deferred financing costs, and reduced by
cash and cash equivalents and cash reserves on deposit with lenders
as additional security. By excluding these amounts, the result
provides an estimate of the contractual amount of borrowed capital
to be repaid, net of cash available to repay it. We believe this
calculation constitutes a beneficial supplemental non-GAAP
financial disclosure to investors in understanding our financial
condition. A reconciliation of interest bearing debt (reported in
accordance with GAAP) to Adjusted Debt is included in this release.
Adjusted Debt to Annualized Adjusted EBITDAre is a
supplemental non-GAAP financial measure we use to evaluate the
level of borrowed capital being used to increase the potential
return of our real estate investments and a proxy for a measure we
believe is used by many lenders and ratings agencies to evaluate
our ability to repay and service our debt obligations over time. We
believe this ratio is a beneficial disclosure to investors as a
supplemental means of evaluating our ability to meet obligations
senior to those of our equity holders. Our computation of this
ratio may differ from the methodology used by other equity REITs
and, therefore, may not be comparable to such other REITs.
Cash
Available for Distribution (CAD) is defined as AFFO less
capital expenditures and any other scheduled principal payments or
receipts.
Contractual Rent represents monthly contractual
cash rent, excluding percentage rents, from properties owned
fee-simple or ground leased, recognized during the final month of
the reporting period, adjusted to exclude amounts received from
properties sold during that period and adjusted to include a full
month of contractual rent for properties acquired during that
period. We use Contractual Rent when calculating certain metrics
that are useful to evaluate portfolio credit, asset type, industry
and geographic diversity and to manage risk.
EBITDAre is a
non-GAAP financial measure and is computed in accordance with
standards established by the National Association of Real Estate
Investment Trusts (NAREIT). EBITDAre is defined as net income
(loss) (computed in accordance with GAAP), plus interest expense,
plus income tax expense (if any), plus depreciation and
amortization, plus (minus) losses and gains on the disposition of
depreciated property, plus impairment write-downs of depreciated
property and investments in unconsolidated real estate ventures,
plus adjustments to reflect the Company's share of EBITDAre of
unconsolidated real estate ventures.
Economic Yield is
calculated by dividing the contractual cash rent, including fixed
rent escalations and/or cash increases determined by CPI (increases
calculated using a month to month historical CPI index) by the
initial lease term, expressed as a percentage of the Gross
Investment.
Funds from Operations (FFO) We calculate FFO in
accordance with the standards established by the National
Association of Real Estate Investment Trusts (NAREIT). FFO
represents net income (loss) attributable to common shareholders
(computed in accordance with GAAP) excluding real estate-related
depreciation and amortization, impairment charges and net (gains)
losses from property dispositions. FFO is a supplemental non-GAAP
financial measure. We use FFO as a supplemental performance measure
because we believe that FFO is beneficial to investors as a
starting point in measuring our operational performance.
Specifically, in excluding real estate-related depreciation and
amortization, gains and losses from property dispositions and
impairment charges, which do not relate to or are not indicative of
operating performance, FFO provides a performance measure that,
when compared year over year, captures trends in occupancy rates,
rental rates and operating costs. We also believe that, as a widely
recognized measure of the performance of equity REITs, FFO will be
used by investors as a basis to compare our operating performance
with that of other equity REITs. However, because FFO excludes
depreciation and amortization and does not capture the changes in
the value of our properties that result from use or market
conditions, all of which have real economic effects and could
materially impact our results from operations, the utility of FFO
as a measure of our performance is limited. In addition, other
equity REITs may not calculate FFO as we do, and, accordingly, our
FFO may not be comparable to such other equity REITs’ FFO.
Accordingly, FFO should be considered only as a supplement to net
income (loss) attributable to common shareholders (computed in
accordance with GAAP) as a measure of our performance.
Gross
Investment represents the gross acquisition cost including the
contracted purchase price and related capitalized transaction
costs.
Initial Cash Yield from properties is calculated by
dividing the first twelve months of contractual cash rent
(excluding any future rent escalations provided subsequently in the
lease and percentage rent) by the Gross Investment in the related
properties. Initial Cash Yield is a measure (expressed as a
percentage) of the contractual cash rent expected to be earned on
an acquired property in the first year. Because it excludes any
future rent increases or additional rent that may be contractually
provided for in the lease, as well as any other income or fees that
may be earned from lease modifications or asset dispositions,
Initial Cash Yield does not represent the annualized investment
rate of return of our acquired properties. Additionally, actual
contractual cash rent earned from the properties acquired may
differ from the Initial Cash Yield based on other factors,
including difficulties collecting anticipated rental revenues and
unanticipated expenses at these properties that we cannot pass on
to tenants.
Liquidity Reserve represents cash held on
deposit until there is a cashflow shortfall as defined in the
Master Trust 2014 agreements or a liquidation of Master Trust 2014
occurs.
Master Trust 2014 is an asset-backed securitization
trust established in 2005, and amended and restated in 2014, which
issues non-recourse notes collateralized by commercial real estate,
net-leases and mortgage loans from time to time. Indirect special
purpose entity subsidiaries of the Company are the borrowers. This
liability is discussed in greater detail in our financial
statements and the notes thereto included in our periodic reports
filed with the SEC.
Occupancy is calculated by dividing the
number of economically yielding Owned Properties in the portfolio
as of the measurement date by the number of total Owned Properties
on said date.
Other Properties are all properties not
included in the Master Trust 2014.
Owned Properties refers
to properties owned fee-simple or ground leased by Company
subsidiaries as lessee.
Real Estate Investment represents
the Gross Investment plus improvements less impairment charges.
SMTA Preferred Stock refers to the 10% Series A Cumulative
Redeemable Preferred Stock.
Weighted Average Remaining Lease
Term is calculated by dividing the sum product of (a) a stated
revenue or sales price component and (b) the lease term for each
lease by (c) the sum of the total revenue or sales price components
for all leases within the sample.
Workout Assets include
tenants or properties that are targeted for potential future
dispositions or other lease restructurings.
Spirit
MTA REIT
Consolidated Balance Sheets
(In Thousands, Except Share and Per Share
Data)
December 31, 2018 December 31, 2017
Assets Investments: Real estate investments: Land and
improvements $ 870,549 $ 973,231 Buildings and improvements
1,526,933 1,658,023 Total real estate investments
2,397,482 2,631,254 Less: accumulated depreciation (459,615 )
(557,948 ) 1,937,867 2,073,306 Loans receivable, net 30,093 32,307
Intangible lease assets, net 79,314 102,262 Real estate assets held
for sale, net 7,263 28,460 Net investments 2,054,537
2,236,335 Cash and cash equivalents 161,013 6 Deferred costs and
other assets, net 83,087 107,770 Goodwill 7,012 13,549
Total assets $ 2,305,649 $ 2,357,660
Liabilities and (deficit) equity Liabilities: Mortgages and
notes payable, net $ 2,138,804 $ 1,926,835 Intangible lease
liabilities, net 17,676 23,847 Accounts payable, accrued expenses
and other liabilities 83,629 16,060 Total liabilities
2,240,109 1,966,742 Redeemable preferred equity:
SMTA Preferred Shares, $0.01 par value,
$25 per share liquidationpreference, 20,000,000 shares authorized:
6,000,000 and 0 sharesissued and outstanding at December 31, 2018
and 2017, respectively
150,000 —
SubREIT Preferred Shares, $0.01 par value,
$1,000 per shareliquidation preference, 50,000,000 shares
authorized: 5,125 and 0 sharesissued and outstanding at December
31, 2018 and 2017, respectively
5,125 — Total redeemable preferred equity 155,125 —
Shareholders' and parent company (deficit) equity: Net parent
investment — 390,918
Common shares, $0.01 par value,
750,000,000 shares authorized;43,000,862 and 10,000 shares issued
and outstanding at December 31, 2018and December 31, 2017,
respectively
430 — Capital in excess of common share par value 201,056 —
Accumulated deficit
(291,071 ) — Total shareholders' and parent company
(deficit) equity (89,585 ) 390,918
Total liabilities and
(deficit) equity $ 2,305,649 $ 2,357,660
Spirit MTA REIT
Consolidated Statements of Operations and
Comprehensive Income (Loss)
(In Thousands, Except Share and Per Share
Data)
Three Months Ended
December 31,
Year Ended December 31, 2018 2017
2018 2017 Revenues: Rental income $
60,871 $ 57,100 $ 240,410 $ 226,586 Interest income on loans
receivable 1,116 146 3,080 768 Other income 883 304
2,817 4,448 Total revenues 62,870 57,550 246,307
231,802
Expenses: General and administrative 2,408
4,042
13,425 20,491 Related party fees 6,083 1,350 19,533 5,500
Transaction costs 56 2,254 8,676 4,354 Property costs (including
reimbursable) 7,185 4,142 12,758 12,496 Interest 31,570 20,409
114,997 76,733 Depreciation and amortization 21,607 19,610 84,678
80,386 Impairment and allowance for loan losses 205,934
6,200 221,349 33,548 Total expenses 274,843
58,007
475,416 233,508
Other income: Loss on debt extinguishment (3
) (2,224 ) (366 ) (2,223 ) Gain on disposition of assets 1,994
4,197 9,458 22,393 Total other income
1,991 1,973 9,092 20,170 (Loss) income
before income tax expense (209,982 )
1,516
(220,017 ) 18,464 Income tax expense (82 ) (44 ) (221 ) (179 ) Net
(loss) income and total comprehensive (loss) income (210,064 )
1,472
(220,238 ) 18,285 Preferred dividends (3,975 ) — (9,275 ) —
Net (loss) income attributable to common shareholders
$ (214,039 ) $
1,472
$ (229,513 ) $ 18,285
Net (loss) income per
share attributable to common shareholders Basic $ (5.00 ) $
0.03 $ (5.36 ) $ 0.43 Diluted $ (5.00 ) $ 0.03 $ (5.36 ) $ 0.43
Weighted average common shares outstanding: Basic
42,851,010 42,851,010 42,851,010 42,851,010 Diluted 42,851,010
42,851,010 42,851,010 42,851,010
Spirit MTA
REIT
Reconciliation of Non-GAAP Financial
Measures
(In Thousands, Except Share and Per Share
Data)
(Unaudited)
FFO and AFFO Three Months Ended December
31, Year Ended December 31, 2018
2017 (1) 2018 (2)
2017 (1) Net (loss) income attributable to common
shareholders $ (214,039 ) $
1,472
$ (229,513 ) $ 18,285 Add/(less): Portfolio depreciation and
amortization 21,607 19,610 84,678 80,386 Portfolio impairments
163,926 6,200 179,341 33,548 Gain on disposition of real estate
assets (1,994 ) (4,197 ) (9,458 )
(22,393 )
FFO $ (30,500 ) $
23,085
$ 25,048 $ 109,826 Add/(less):
Loss on debt extinguishment 3 2,224 366 2,223 Transaction costs 56
2,254 8,676 4,354 Real Estate acquisition costs 138 — 411 —
Non-cash interest expense 3,751 1,878 11,623 6,069 Straight-line
rent, net of related bad debt expense (722 )
(1,512
) (3,000 ) (2,406 ) Other amortization and non-cash charges 136 59
507 568 Non-cash compensation expense 451
1,030
3,326 6,131 (Recovery) amortization of the promote fee (786 ) — 833
— Other impairment and allowance for loan losses 42,008
— 42,008 —
AFFO $ 14,535 $
29,018
$ 89,798 $ 126,765
Dividends declared to common shareholders $ 57,191 N/A $ 71,381 N/A
Net (loss) income per share of common stock Diluted
(3) $ (5.00 ) $ 0.03 $ (5.36 ) $ 0.43
FFO per share of common
stock Diluted (3) $ (0.72 ) $ 0.54 $ 0.58 $ 2.56
AFFO per
share of common stock Diluted (3) $ 0.33 $
0.68
$ 2.09 $ 2.96
Weighted average shares of common stock
outstanding: Basic 42,851,010 42,851,010 42,851,010 42,851,010
Diluted 42,851,010 42,851,010 42,851,010 42,851,010 (1)
Amounts for the year ended December 31, 2017 are based
entirely on results of SMTA's legal predecessor entities. (2)
Amounts for the year ended December 31, 2018 include five months of
income and expense items based on SMTA's legal predecessor entities
and seven months of actual results from SMTA operations as a
stand-alone company. (3) For the three months and year ended
December 31, 2018, there were dividends declared to unvested
restricted shareholders of $199 thousand and $249 thousand,
respectively.
Spirit MTA REIT
Reconciliation of Non-GAAP Financial
Measures
(In Thousands, Except Share and Per Share
Data)
(Unaudited)
Adjusted Debt, Adjusted EBITDAre, Annualized Adjusted
EBITDAre December 31, 2018
2017 Master Trust 2014, net $ 1,905,321 $ 1,926,835
CMBS, net 233,483 —
Total debt, net
2,138,804 1,926,835 Add/(less): Unamortized debt
discount 21,155 36,342 Unamortized deferred financing costs 21,885
17,989 Cash and cash equivalents (161,013 ) (6 ) Cash reserves on
deposit with lenders as additional security classified as other
assets (44,087 ) (66,504 )
Adjusted Debt $
1,976,744 $ 1,914,656 Preferred Stock at
liquidation value 155,125 —
Adjusted
Debt + Preferred Stock $ 2,131,869
$ 1,914,656 Three Months
Ended December 31, 2018 2017 (1)
Net (loss) income $ (210,064 ) $ 1,472 Add/(less):
Interest 31,570 20,409 Depreciation and amortization 21,607 19,610
Income tax expense 82 44 Gain on disposition of real estate assets
(1,994 ) (4,197 ) Portfolio impairments 163,926
6,200
EBITDAre $ 5,127
$ 43,538 Add/(less): Adjustments
to revenue producing acquisitions and dispositions (2) (294 ) —
Transaction costs 56 2,254 Real estate acquisition costs 138 — Loss
on debt extinguishment 3 2,224 (Recovery) amortization of the
promote fee (786 ) — Other impairment and allowance for loan losses
42,008 —
Adjusted EBITDAre
$ 46,252 $ 48,016
Other adjustments for Annualized Adjusted EBITDAre — —
Impact of Shopko bankruptcy (3) (6,991 )
Annualized Adjusted
EBITDAre $ 157,044 $ 192,064
Adjusted Debt / Annualized
Adjusted EBITDAre (3) 12.6x 10.0x
Adjusted Debt + Preferred
/ Adjusted EBITDAre (3) 13.6x N/A (1) Amounts for
2017 are based on the SMTA's allocated portion of Spirit’s expense.
(2) Revenue producing acquisitions and dispositions were adjusted
as if such acquisitions and dispositions had occurred at the
beginning of the quarter. (3) Adjustments to exclude contractual
rent and interest income received from Shopko, as SMTA does not
expect to receive any additional cash flow going forward from
Shopko, and property operating costs on assets leased to Shopko, as
SMTA does not expect to pay due to the bankruptcy of Shopko and
subsequent foreclosure on the loans secured by such properties.
Excluding the outstanding principal of the Shopko CMBS financing of
$157.4 million, the Adjusted Debt/Annualized Adjusted EBITDAre
ratio would be 11.6x and the Adjusted Debt + Preferred/Annualized
Adjusted EBITDAre ratio would be 12.6x for the 2018 period
presented.
Spirit MTA REIT
Components of Non-GAAP Financial
Measures
(In Millions, Unaudited)
Components of NAV
Master Trust 2014 December 31, 2018
Master Trust 2014 Contractual Rent $ 179.2 Less: Contractual Rent
of Shopko properties in Master Trust 2014 (1.5 ) Master Trust 2014
Contractual Rent excluding Shopko $ 177.7 Real Estate
Investment of vacant properties in Master Trust 2014 $ 18.0
Mortgage loans in Master Trust 2014 $ 27.9 Master Trust 2014
restricted cash (1) $ 21.7 Master Trust 2014 debt outstanding $
(1,941.4 )
Academy Distribution Center
December 31, 2018 Academy Contractual Rent $ 9.3 Academy
CMBS debt outstanding $ (83.0 )
Workout Assets
December 31, 2018 Workout Assets Contractual Rent (2) $ 6.4
Real Estate Investment of vacant Workout Assets $ 15.0
Other Assets December 31, 2018 Unrestricted
cash (3) $ 105.8 Shopko B-1 Term Loan (4) $ 34.4
Other
Liabilities December 31, 2018 Termination fee (5)
$ 48.1 Redeemable preferred equity $ 155.1 (1)
Restricted cash as of December 31, 2018 includes $5.6 million in
the Liquidity Reserve. (2) Property cost leakage for occupied
Workout Assets for fourth quarter of 2018 annualized was $3.4
million. (3) Unrestricted cash balance as of March 14, 2019. (4) As
of December 31, 2018, the Company had an allowance for loan loss
related to the Shopko B-1 Term Loan of $33.8 million. (5)
Termination fee is 1.75x the sum of the annualized asset management
fee under the Asset Management Agreement of $20.0 million and the
annualized property management fee under the Property Management
Agreement of approximately $7.5 million. Does not take into account
transition services fees, which require eight months of service
fees upon a termination notice.
Illustrative Impact of Shopko
Exposure
Three Months Ended December 31,
2018 Annualized
Shopko (1)
Three Months Ended December 31,
2018 Annualized excluding Shopko
AFFO $ 58.1 $ (17.0 ) $ 41.1 Collections of principal on loans
receivable 5.3 (2.4 ) 2.9 Repayments under mortgages and notes
payable (2) (41.2 ) 4.0 (37.2 ) Capital expenditures (0.9 ) —
(0.9 )
CAD $ 21.3 $ (15.4 ) $ 5.9 (1)
Shopko adjustments include Contractual Rent from Shopko, interest
and principal payments on the Shopko B-1 Term Loan, interest and
principal payments on the two seller-financed notes on Shopko
properties, and real estate taxes on properties leased to Shopko.
(2) There was no use of the variable funding notes during the three
months ended December 31, 2018.
Spirit MTA REIT
Portfolio Overview
(Square Feet In Thousands)
Properties
Annualized Contractual
Rent
Occupied Square Feet
Vacant Properties
Vacant Square Feet
Master Trust 2014 778 $179.2 M 11,794 19 152 Other
Properties 98 $56.4 M 7,647
6 204 SMTA 876 $235.6 M 19,441 25 356
Top Ten Tenants at December 31,
2018:
Master Trust 2014 Other Properties
Tenant (1) Properties Total
Square Feet Percent of MTAContractual
Rent Tenant (1) Properties
Total Square Feet
Percent of Other
PropertiesContractual Rent
AMC Entertainment, Inc. 14 696 6.1 % Shopko (2) 83 5,803 72.1 %
Universal Pool Co., Inc. 14 543 4.0 % Academy, LTD. 1 1,501 16.6 %
Crème De La Crème, Inc. 9 190 3.1 % PricewaterhouseCoopers LLP 1
135 3.8 % Goodrich Quality Theaters, Inc. 4 245 3.0 % Children's
Learning Adventure USA, LLC 3 71 3.7 % Life Time Fitness, Inc. 3
420 2.9 % Crown Distributing LLC 1 94 2.1 % Destination XL Group,
Inc. 1 756 2.9 % Neighbors Health System, Inc. 2 15 1.1 % Buehler
Food Markets Inc. 5 503 2.9 % Pleasanton Fitness, LLC 1 28 0.6 %
Carmax, Inc. 4 201 2.7 % Professional Resource Development, Inc. 59
234 2.4 % Regal Entertainment Group 6 267 2.0 %
119 4,055 32.0 % 92 7,647 100.0 % (1)
Tenants represent legal entities ultimately responsible for
obligations under the lease agreements or affiliated entities.
Other tenants may operate the same or similar business concepts or
brands as those set forth above. (2) SMTA had 88 owned properties
leased to Shopko as of December 31, 2018, 83 were encumbered by
Shopko CMBS debt and were within the Other Properties segment and
the remaining five were collateral within Master Trust 2014.
Industry Diversification at
December 31, 2018:
Master Trust 2014 Other Properties
Industry Properties Total Square
Feet Percent of MTAContractual Rent
Industry Properties Total Square
Feet
Percent of Other
PropertiesContractual Rent
Restaurants - Quick Service 305 792 14.3 % General
Merchandise (1) 83 5,804 72.1 % Movie Theaters 29 1,519 13.4
% Sporting Goods 1 1,501 16.6 % Restaurants - Casual Dining 89 640
11.4 % Multi-Tenant 1 135 3.8 % Health and Fitness 18 1,021 7.7 %
Education 3 71 3.7 % Medical / Other Office 77 503 6.9 %
Distribution 1 94 2.1 % Specialty Retail 22 857 5.9 % Medical /
Other Office 2 14 1.1 % Home Furnishings 17 907 5.0 % Health and
Fitness 1 28 0.6 % Automotive Parts and Service 79 362 4.9 % Vacant
6 204 — % Grocery 19 1,020 4.8 % Education 15 358 4.7 % Automotive
Dealers 12 323 4.5 % Apparel 3 1,019 3.4 % Other 3 183 2.7 %
Entertainment 4 200 2.2 % Sporting Goods 3 331 1.9 % Manufacturing
7 763 1.3 % Car Washes 6 49 1.3 % Building Materials 28 458 1.2 %
General Merchandise 8 317 1.1 % Drug Stores / Pharmacies 8 83 0.9 %
Multi-Tenant 2 34 0.3 % Dollar Stores 5 55 0.2 % Vacant 19
152 — % 778 11,946 100.0
% 98 7,851 100.0 % (1) SMTA had 88 owned properties
leased to Shopko as of December 31, 2018, 83 were encumbered by
Shopko CMBS debt and were within the Other Properties segment and
the remaining five were collateral within Master Trust 2014.
Asset Type Diversification at
December 31, 2018:
Master Trust 2014 Other Properties Asset
Type Properties Total Square
Feet Percent of MTAContractual Rent
Properties Total Square Feet
Percent of Other
PropertiesContractual Rent
Retail 660 9,245 84.7 % Retail 95 6,093 77.6 % Industrial 38 2,022
6.2 % Industrial 2 1,594 18.6 % Office 80 679 9.1 %
Office 1 164 3.8 % 778 11,946 100.0 % 98 7,851 100.0
%
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version on businesswire.com: https://www.businesswire.com/news/home/20190321005764/en/
INVESTORSInvestor Relations(972)
476-1409SMTAInvestorRelations@SpiritRealty.com
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